Keeping Arbitrations from Becoming Kangaroo Courts

As the contributions to this Symposium suggest, much could be done to improve arbitration, particularly the sort of “new” or “mass” arbitration that has sprouted during the past twenty-five years. Mass arbitration stems from the judiciary’s modern favorable attitude toward enforcement of arbitration clauses, even those imposed upon consumers, employees, small vendors, and debtors as part of a standardized contract of adhesion. In a separate article, I present a more comprehensive list of what I regard as the necessary steps that must be taken to ensure minimally acceptable quality and fairness in mass arbitration. In this Article, I focus more specifically on the questions of impartiality, adherence to substantive law, and judicial review, although these concerns are of course also dimensions of any reasonably broad inquiry into quality. Part I of this Article outlines a number of areas of concern regarding arbitral fairness relative to that of courts. Part II briefly recaps the modern proarbitration jurisprudence of the Supreme Court that led to the explosion of mass arbitration during the late twentieth century, which in turn created much greater potential that arbitration could become an unfair forum for dispute resolution. Of particular concern is the impartiality and competence of the arbitrator, consistency with substantive law, and quality control through appellate review. Part III advances three operational proposals for achieving this rough equivalency between arbitration and litigation: (1) a licensing system for arbitrators in “mass” arbitrations; (2) a default rule that arbitration follow substantive law and reach results consistent with substantive law; and (3) replacement of the current deferential standard of review for arbitration awards with appellate review similar to that accorded trial court decisions. As explained in Part IV, parties to a traditional commercial arbitration may stipulate to avoid these default rules provided that their agreement is sufficiently clear, knowing, and voluntary. Part IV clarifies that parties in traditional commercial arbitration may avoid the requirement of using licensed arbitrators bound to follow substantive law and may stipulate to restricted judicial review.